iPhone trade-ins have become an increasingly important aspect of Apple’s sales strategy for the iPhone. This includes its own Apple Trade In program, as well as trade-in promotions offered by carrier partners. A new report from The Wall Street Journal today offers an inside look at this industry, showing how iPhones that are traded in get refurbished and ultimately make companies money.
Watch an iPhone go through the trade-in process
For the report, the WSJ’s Joanna Stern had the opportunity to visit U.S. Mobile Phones, USMP, one of the partners used by the major US carriers. According to the report, USMP processed more than 2.5 million trade-in devices last year, and most of them were iPhones.
While Joanna was visiting the warehouse, USMP took delivery of 3,000 trade-in iPhones from “one of the major U.S. mobile carriers.” This allowed Joanna to follow along with the process, using a traded-in iPhone 11 as the centerpiece.
The trade-in process for this iPhone 11 had four key steps: data erasure, cleaning, grading, and kitting. Here’s what happens after those steps:
Two-thirds of the phones that arrive at the USMP facility get data-wiped, cleaned up and sold off to wholesalers, often overseas. The other third goes to its sister company, Back in the Box, to be cleaned up, refurbished and sold to buyers on Amazon or Back Market, a popular secondhand-phone marketplace.
USMP listed this iPhone 11 for resale at $350 — a decent profit compared to the $200 trade-in value…but there are other expenses. As explained by Back in the Box CEO, Ari Marinovsky:
That pricing, Mr. Marinovsky said, gives the consumer a good discount. It also gives the business enough margin—somewhere between 10% to 15%—to have some profit. Even though you might calculate Back in the Box and USMP making up to $100 on this particular phone, the refurbishing labor and Back Market’s 10% cut eat into the profit. So does the prevalence of dud phones that must be sold off at a loss, he said.
The full report from Joanna Stern at The Wall Street Journal is well worth the read. It’s fascinating watching this iPhone 11 go from trade-in, through refurbishment, and ultimately listed for sale – especially when you consider the scale at which this happens. (Apple News link)
Check out the associated video below:
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